*ST Changyao Finally Faces Delisting: Financial Fraud Brings Consequences, Multiple Risks Crush Traditional Chinese Medicine Enterprise

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On March 12, *ST Changyao (300391) announced that it received the decision from the Shenzhen Stock Exchange to terminate the listing of its shares. The company’s stock will officially cease trading, which means this listed company, mainly engaged in traditional Chinese medicine-related business, is ultimately退出 the A-share market due to financial fraud and poor management.

The warning signs of delisting were already evident as early as January this year. On January 23, *ST Changyao received an Administrative Penalty Decision from the China Securities Regulatory Commission (CSRC). It was found that the company’s annual reports from 2021 to 2023 contained serious false records. Specifically, its controlling subsidiary confirmed revenue by creating false inbound and outbound shipment documents without actual sales transactions, artificially inflating operating income by 215 million yuan, 284 million yuan, and 234 million yuan over three years, totaling over 733 million yuan in fabricated revenue. The total false profit amounted to approximately 163 million yuan, with 88.23% of the disclosed profit in 2022 being fake, nearly all of it false profit. The CSRC imposed a fine of 10 million yuan and held the company accountable for its violations.

The Shenzhen Stock Exchange pointed out that the behaviors of *ST Changyao have already triggered the delisting conditions specified in Article 10.5.1, Item 1, and Article 10.5.2, Item 6 of the “GEM Listing Rules (2025 Revision).” Based on the review committee’s deliberation, a final decision was made to delist the stock.

According to the announcement, *ST Changyao’s stock will resume trading on March 20 and enter a delisting restructuring period, which lasts for 15 trading days, with the last trading date expected to be April 10, 2026. During the restructuring period, the stock will be traded on the risk warning board, with no price limit on the first trading day, and a daily limit of 20% afterward. After the stock is delisted, it will be transferred to the delisting section managed by the National Equities Exchange and Quotations (NEEQ) for transfer.

Financial fraud is just the tip of the iceberg for *ST Changyao’s crisis; its operational fundamentals have long been severely damaged.

Public information shows that *ST Changyao mainly engages in the production and sale of Chinese herbal decoction pieces, as well as wholesale of medicines, health products, and medical devices. However, in recent years, it has faced multiple operational risks: the company and its subsidiaries are involved in several lawsuits and arbitration cases, with a total involved amount of about 54.6952 million yuan within the past twelve months, accounting for 12.64% of its latest audited net assets; it also faces issues such as large overdue interest-bearing debts, frozen accounts, and significant tax arrears of controlling subsidiaries. As of the third quarter of 2025, the company’s asset-liability ratio reached 134.71%, with total shareholders’ equity at -665 million yuan, indicating insolvency.

Notably, before suspension, *ST Changyao exhibited abnormal market performance, with four consecutive trading days hitting 20cm涨停 (limit-up). However, this did not change its delisting fate. As of the close on January 23, the company’s stock price was 0.92 yuan per share, with a total market value of only 322 million yuan, already fallen into the “仙股” (penny stock) category.

*ST Changyao’s delisting is both a painful consequence of financial fraud and an inevitable result of poor management. It also serves as a warning to the capital market: regulators are increasing efforts to investigate information disclosure violations and financial fraud. Any enterprise attempting to evade regulation and mislead investors through false records will ultimately be淘汰 (eliminated) by the market. Investors should remain rational and be cautious of speculative risks associated with “garbage stocks.”